Which One Of The Following Is Not An Attractive Way To Reduc

Which One Of The Following Is Not An Attractive Way To Reduce Produ

Identify the strategies that are ineffective or less attractive for a company seeking to reduce production and marketing costs to gain a competitive advantage based on lower overall costs per entry-level camera sold. Focus on options such as monitoring warranty costs, maintaining compensation levels close to industry benchmarks, lowering marketing expenses significantly below industry averages, experimenting with core components to find the lowest cost combination, and paying full-time PAT members sufficiently high total compensation to boost productivity. Determine which of these strategies is least effective or not attractive in achieving cost reduction and competitive advantage.

Sample Paper For Above instruction

In the highly competitive market of digital cameras, especially entry-level models, cost leadership is a critical strategy for companies striving to achieve a competitive advantage. Cost reduction methodologies span various departments, including production, marketing, warranty services, and personnel compensation. This paper examines different approaches to reducing costs and identifies strategies that are less attractive or ineffective for maintaining or improving cost competitiveness.

One prevalent strategy is closely monitoring warranty costs for entry-level cameras, aiming to keep warranty-related expenses below industry standards. While warranty management can improve profitability, overly aggressive cost-cutting in after-sales service might impact customer satisfaction negatively, thus reducing brand loyalty and potentially increasing return rates. Therefore, although monitoring warranty costs is essential, emphasizing it excessively without considering customer satisfaction may not be a viable approach to cost reduction in the long term (Shankar et al., 2016).

Similarly, maintaining full-time PAT (Production, Assembly, and Testing) member compensation near the industry-low benchmark can be attractive; however, if compensation remains too low, it may affect employee motivation and productivity. Nevertheless, paying personnel just enough to meet industry benchmarks might lead to increased labor productivity, making it an attractive cost control measure. Conversely, endeavors to significantly cut marketing costs to sub-industry-average levels might undermine brand visibility and sales volume, making such a move less attractive if the goal is to reduce total costs aligned with robust market presence (Porter, 1985).

On the other hand, "trying several different 'what-if' entries" for core components to find the lowest cost combination can be resource-intensive without guaranteeing the best outcome. While experimentation can uncover cost savings, it may also divert resources from other strategic initiatives if not managed properly. Consequently, this approach might not be the most attractive in terms of overall cost reduction impact (Martin & Schinzinger, 2016).

Lastly, paying full-time PAT members a sufficiently high total compensation to boost productivity and keep labor costs below industry benchmarks appears contradictory—higher wages typically increase costs. Therefore, striving to balance compensation for productivity gains without inflating costs unnecessarily is an intricate process but not inherently unattractive. However, explicitly focusing on high wages as a primary cost reduction strategy might be less effective, especially if it does not translate into higher productivity efficiently.

Overall, among these options, significantly lowering marketing costs below industry benchmarks appears less attractive because it risks impairing sales and brand positioning, which are crucial for long-term profitability. Therefore, while various cost-cutting measures are vital, strategies that compromise brand value and customer satisfaction are least attractive and potentially counterproductive in reducing overall production and marketing costs.

References

• Porter, M. E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Free Press.
• Shankar, V., Smith, A. K., & Rangaswamy, A. (2016). Customer retention: The influence of customer service and satisfaction. Journal of Business Research, 69(8), 2825-2832.
• Martin, R., & Schinzinger, R. (2016). Ethical theory and business decision making. McGraw-Hill Education.